Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Q2 FY2016 Earnings Presentation
25 slides from Darden Restaurants's earnings presentation, Dec 18, 2015
Slide 1: Earnings Call Fiscal 2016 Q2
Earnings Call Fiscal 2016 Q2 December 18, 2016
Slide 2: Disclaimer
Disclaimer IMPORTANT NOTICE The following slides are part of a presentation by Darden Restaurants, Inc. (the "Company") and are intended to be viewed as part of that presentation (the "Presentation"). No representation is made that the Presentation is complete. Forward-looking statements in this com
Slide 3: Non GAAP Information
Non GAAP Information The information in this communication includes financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”), such as adjusted net earnings per diluted share from continuing operations.
Slide 4: Today's Topics
Today’s Topics Second Quarter Highlights Financial Update Framework for Long-Term Value Creation 3
Slide 5: Financial Highlights
Financial Highlights Darden Sales ($bn) Same-Restaurant Sales Growth - Comparable Calendar Basis 3.8% 3.6% 3.4% $1.88 $1.73 $1.65 $1.69 2.9% $1.62 $1.60 $1.56 $1.61 FY14 FY15 FY14 FY15 FY15 FY16 FY15 FY16 Q3 Q41 Q1 Q21 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16 Darden Adjusted EPS2 $1.08 $0.99 $0.68 $0.54 $0.5
Slide 6: Olive Garden: Momentum continued…
Olive Garden: Momentum continued… Q2 Highlights Same-Restaurant Sales1 3.4% 2.8% 2.8% Calendar +300bps Same-Restaurant Sales1 2.2% 2.5% 0.5% Same-Restaurant Sales Industry Outperformance FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 0.9% Calendar Same- 5th Consecutive Qtr. of Same- OG To Go Sales Restaura
Slide 7: Longhorn: Strong topline momentum…
Longhorn: Strong topline momentum… Q2 Highlights 3.6% Calendar +400bps Same-Restaurant Sales1 Same-Restaurant Sales1 Same-Restaurant Sales Industry Outperformance 5.4% 5.2% 4.8% 3.6% 1.5% Calendar Same- 11th Consecutive Qtr. of Same- Restaurant Guest Count Restaurant Sales Growth FY15 Q3 FY15 Q4 FY1
Slide 8: Specialty Restaurants: Same-restaurant sales growth at all five brands…
Specialty Restaurants: Same-restaurant sales growth at all five brands… Same-Restaurant Sales1 5.4% 3.6% 2.4% 3.2% 2.4% FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 5.2% 3.1% 3.8% 3.8% 3.8% FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 5.8% 5.8% 3.2% 2.5% 1.7% FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 6.1% 6.4% 4.4% 0.9% 0.9% FY15 Q3 F
Slide 9: Financial Update
Financial Update J DARDEN RESTAURANTS Breeze ISLAND GRILLE ees ae ee STEAKHOUSE = =
Slide 10: Fiscal 2016 Q2 Adjusted Earnings Growth Drivers
Fiscal 2016 Q2 Adjusted Earnings Growth Drivers Fiscal 2016 Q2 Adjusted Earnings Growth Drivers1 Fiscal 2015 Q2 Adjusted Diluted Net EPS from Continuing Operations $0.28 Operating Performance Improvement Growth 0.27 Net Legal Settlements (G&A) 0.05 Restaurant Impairments (0.04) Net Incremental Impac
Slide 11: Fiscal 2016 Second Quarter Margins
Fiscal 2016 Second Quarter Margins As Reported As Adjusted Continuing Operations Q2 2016 Q2 2016 vs. Q2 2015 (Bps) Favorable/(Unfavorable) Food & Beverage 30.0% 30.0% 110 Restaurant Labor 32.6% 32.6% (10) Restaurant Expenses 17.3% 17.3% 60 Marketing 3.6% 3.6% 40 Restaurant-Level EBITDA 16.6% 16.6% 2
Slide 12: Sales and profit increases in all segments…
Sales and profit increases in all segments… All of our segments had positive sales growth… Fine Dining Other $882 $892 $346 $365 $211 $228 $120 $123 FY15 Q2 FY16 Q2 FY15 Q2 FY16 Q2 FY15 Q2 FY16 Q2 FY15 Q2 FY16 Q2 …coupled with significant Segment Profit1 growth ($mm) Fine Dining Other Segment Profit
Slide 13: Real Estate Transaction Summary
Real Estate Transaction Summary Number of Properties Net Proceeds to Date Transactions Status Completed Remaining ($ millions) Four Corners Property Trust, Inc. - REIT Completed 424 0 $315 Restaurant Sale Leasebacks In Process 62 2 $199 Restaurant Support Center Sale Leaseback Completed 1 0 $117 Tot
Slide 14: Dividend & Share Repurchase
Dividend & Share Repurchase Updated Dividend DRI Annualized DPS - Pre Spin ($0.55 per quarter) $2.20 Minimum DRI Updated Annualized DPS - Post Spin ($0.4375 per quarter) $1.75 FCPT Estimated Annualized DPS ($1.35, adjusted for 1:3 spin ratio) $0.45 Aggregate DRI and FCPT annualized DPS - Post Spin $
Slide 15: FY2016 Annual Outlook
FY2016 Annual Outlook Total +2.5% to +3.0% Same-Restaurant Olive Garden +1.5% to +2.5% Sales LongHorn Steakhouse +3.0% to +4.0% Specialty Restaurants Approximately 3% Restaurant Openings New Restaurant Openings 18 to 22 Tax Rate Annual Effective Rate 23% to 25% Adjusted Earnings Total $3.25 to $3.35
Slide 16: Annual Cost Reduction Outlook
Annual Cost Reduction Outlook Comprehensive cost reductions underway without impacting the guest experience Estimated cost reduction ($millions) Previous $35 $50 - $55 $15 - $20 $100 - $110 Outlook $30 - $40 $145- $165 COGS Restaurant expenses & labor costs SG&A expenses $80 - $90 $35 FY 2015 FY 2
Slide 17: Long-Term Value Creation Framework
Long-Term Value Creation Framework
Slide 18: Strategy for Long-Term Performance
Strategy for Long-Term Performance Back-To-Basics Operating Philosophy 1 Driving Philosophy Culinary Innovation & Execution Attentive Service Engaging Atmosphere Integrated Marketing 4 Competitive Significant Scale Extensive Data & Insights Rigorous Strategic Planning Results- Oriented C
Slide 19: Long-Term Value Creation Framework
Long-Term Value Creation Framework Annual Target, Over Time Same-Restaurant Sales 1% - 3% Business Performance New Restaurant Growth 2% - 3% 7% - 10% (EAT Growth) EBIT Margin Expansion 10 - 40bps Return of Dividend Payout Ratio 50% - 60% 3% - 5% Cash Share Repurchase ($millions) $100 - $200 Total Sh
Slide 20: Thank you to our 150,000 Team Members!
Thank you to our 150,000 Team Members! 19
Slide 21: Additional Information
J. DARDEN Additional Information” RESTAURANTS Breeze ISLAND GRILLE ees ae ee STEAKHOUSE = =
Slide 22: Reported to Adjusted Earnings Reconciliations
Reported to Adjusted Earnings Reconciliations Fiscal 2016 Q1 Q2 Reported Diluted Net EPS from Continuing Operations $0.63 $0.23 Real Estate Plan Implementation 0.05 0.16 Debt Retirement Costs 0.17 Strategic Action Plan and Other Costs (0.02) Adjusted Diluted Net EPS from Continuing Operations $0.68
Slide 23: Commodities Outlook
Commodities Outlook Product Breakdown and Contract Coverage For Fiscal 2016 Dec-May FY2016 Spend by Category Coverage Outlook Beef 19% 55% Low Single Digit Inflation Produce 13% 80% Low Single Digit Inflation Dairy / Oil1 12% 65% Low Single Digit Inflation Seafood 11% 95% Low Single Digit Deflatio
Slide 24: Updated FY2016 Annual Earnings Growth Outlook
Updated FY2016 Annual Earnings Growth Outlook Per Share % Growth Fiscal 2015 Adjusted Diluted Net EPS from Continuing Operations1 $2.63 Remove 53rd Week Impact in Fiscal 2015 (In Q4) (0.07) Fiscal 2015 52 Week Adjusted Diluted Net EPS from Continuing Operations1 $2.56 Growth from Fiscal 2015 (52 Wee
Slide 25: Calendar Comparable Basis - Defined
Calendar Comparable Basis - Defined Q1 Comparable Calendar June 1, 2015 – August 30, 2015 vs. June 2, 2014 – August 31, 2014 Q2 Comparable Calendar August 31, 2015 - November 29, 2015 vs. September 1, 2014 - November 30, 2014 1 Represents non-GAAP measure. A reconciliation of GAAP to non-GAAP number